April 2008

Web-based collaboration could represent both the biggest opportunity and the biggest threat CIOs will ever encounter in their careers. Much of the talk among senior IT leaders to date has been around the need to balance demand for open collaboration beyond the walls of the organisation against the need for information security and corporate control. But the big threat is not one of security (which in the end is a complex-but-solvable technical issue) or control (an equally soluble management issue), but of failing to understand the wider context of web-based collaboration and of underestimating its true business impact.

We are all used to hyperbole in this industry. When the Internet was first foisted upon an unsuspecting business world 15 years ago, visionaries and vendors alike enchanted us with talk of revolution. It didn’t take long for the cynicism to set in: poor initial connection speeds and a lacklustre online experience left many feeling short-changed, while IT was charged with mopping up a whole new range of business messes like spam, information overload and an explosion of malware and hacking attacks. The dotcom crash of 2001 gave further succour to those who had always believed claims for the business potential of the Net were overblown.

At the same time, few would deny today that the Internet has had a phenomenal impact on how we do business. While the web may indeed be viewed as ‘just another channel to market’, it is a channel that has continued to grow significantly year on year. The web experience becomes ever richer, connection speeds and the power of technology are accelerating all the time, while the cost of access continues to come down. Email and intranets have displaced almost all paper-based communication inside our organisations, while extranets and corporate websites have allowed us to share a growing range of information, services and support materials instantly with wider communities of partners, suppliers and customers. And, of course, the Net has enabled the creation of new global markets for goods, services and labour.

Speaking at a Gartner conference in November 2007, research director Nikos Drakos predicted that by 2009 60% of IT collaboration projects would link businesses to wider communities of suppliers and customers. “Organisations have long understood the value of growing and supporting the business environment in which they operate. Collaboration can be supported in new ways…and IT has a fundamental role in embedding these practices in the business,” he said.

But why is web collaboration today any different? Are we not simply talking about the steady onward flow of the great Internet wave, one upon which organisations can comfortably bob along? There are significant reasons to believe not. As writer Howard Rheingold pointed out in his recent TED Conference talk ‘Way New Collaboration’: “Very quickly we are going to see a significant proportion, if not the majority of the human race walking around holding, carrying, or wearing supercomputers linked at speeds greater than what we consider to be broadband today. Keep in mind that in the past new forms of cooperation, enabled by new technology, have created new forms of wealth and we may be moving into yet another economic form that is significantly different from previous ones.”

While Rheingold’s remarks may sound suspiciously similar to the sort of talk we were hearing from self-styled ‘cyberspace visionaries’ back in the early 1990s, the context in which he makes them has changed irrevocably. Old corporate boundaries are breaking down. The efforts of many CIOs to enable mobile and remote working, implement service oriented architectures and explore richer and more open means of online collaboration both internally and externally are all just building blocks of a much more fundamental change.

There comes a point when any new enabling technology is freed from the artificial boundaries that have been constraining its potential. MIT professor, lecturer and author Erik Brynjolfsson uses the analogy of the Second Industrial Revolution at the tail end of the nineteenth century, when electricity replaced steam power. Brynjolfsson notes that when electricity was first introduced to industry, there were no productivity improvements for around 30 years. This was because there were initially no fundamental changes to the way factories worked – firms simply replaced their old steam engines with electrical engines, but kept all the machinery physically connected on separate floors (since with steam power, machines had to be physically connected with cogs).

It was not until 30 years later (“the time it takes for one generation to retire”) that firms began to lay out factories on a single floor according to the process – the familiar ‘production line’. “When they did that, they achieved documented productivity improvements of 100-200%,” Brynjolfsson says.

This is not unlike the shift that seems to be happening right now. Web 2.0 pioneers and other organisations adopting a similar spirit of open, borderless collaboration are forging the economic model and business landscape of the future, and it is one where physical boundaries no longer matter, and where open collaboration fosters mutual success. In his TED speech, Rheingold points to a number of big-name exemplars, including Toyota, Eli Lilly, HP, Sun, Sony, Amazon and eBay. “Some of the most fierce competitors in the IT world are open-sourcing their software and providing portfolios of patents for the commons. Eli Lilly and, again, the fiercely competitive pharmaceutical world has created a market for solutions to pharmaceutical problems. Toyota, instead of treating its suppliers as a marketplace, treats them as a network and trains them to produce better, even as they also train them to produce better for their competitors. Now, none of these companies are doing this out of altruism. They are doing this because they are learning that a certain kind of sharing is their self-interest,” he says.

Rheingold adds: “Google enriches itself by enriching thousands of bloggers through AdSense. Amazon has opened its application programming interface to 60,000 developers and countless Amazon shops. They are enriching others not out of altruism but as a way of enriching themselves. eBay solved the prisoner’s dilemma and created a market where none would have existed by creating a feedback mechanism that turns a prisoner’s dilemma game into an insurance game.”

Indeed, examples of the kind of step change Brynjolfsson and Rheingold are referring to abound at the moment. Just type “Web2.0 business cool” (no quotes) into into del.icio.us, the social bookmarking site, and you’ll be presented with a staggering array of innovative startup companies that presage the way the upcoming generation wants to - and will - do business in future. Nearly all enable online community and collaboration in some way.

Fortunately, many members appreciate the need to attract this new generation into their organisations, and understand that if they are to retain them, then they will need to allow them to operate in the open, collaborative, borderless fashion that inspires them to be most innovative and productive. But as well as just looking at issues such as the use of social networking, remote working, SOA and so on as individual IT and management challenges, CIOs also need to immerse themselves in this new environment and understand the bigger picture. Otherwise, how will they be able to make the passionate and persuasive business cases that will be needed to obtain support at all levels for making the (often vast) cultural changes required?

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